Deriveum vs Virus


  • Provide instrument for clear risk allocation for EUR denominated investments
  • Allow smaller player to enter the CDS market
  • Affect €50 billion of investment in the next two years
  • Create over 150’000 jobs across the EU

In the EUvsVirsu hackathon we aim to

  • Build marketing strategy
  • Create business plan


Please check the context of the Deriveum Europe Project

Please check the Business Canvas of Deriveum Europe that summarizes our business plan for the first three years of operation

Why Deriveum vs Virus?

The Deriveum project was developed to service the needs of the high-yield bond investors across the developing world. However, the Covid-19 economic fallouts caused the dysfunctionality observed in the high-yield risk allocation are replicated across the board of investable assets.

We can create a spin-off of our product that would be denominated in Euro, creating the conditions to attract €50 billion worth of private investment in various projects across the continent in the next two years. Those private investments will create over 150’000 jobs, that wouldn’t have materialized without an instrument for effective risk-sharing.

We are convinced that Deriveum Europe can create a win-win-win situation where investors, financial institutions and industries can work together to achieve their financial interest and benefit the economy at large.

How we reached the number of 150 k jobs?

Based on the Simulation executed in the regulatory sandbox of the Bank of Lithuania/ECB we estimated the safe levels for concentration of risk backing fully reserved CDS exposure, without the possibility to create systemic impact in a default waterfall. Extrapolating the results to the Eurozone, we calculated the safe exposure position to be of €50 billion or less. Thus we will hard-cap the Deriveum Europe to not exceed that valuation.

€50 billion is the investment that would become available only if Deriveum provides the certainty of risk-sharing. Coupled with a rough estimation that a long-term high-paying job requires an investment of €300’000 we can see that there is a net gain of over 150’000 jobs across the EU.

How Deriveum works?

Deriveum is a special commodity class for CDS (debt insurance contracts). The insurer purchases tokens with currency (USD). The tokens are pledged as collateral and are locked for the duration of the contract. The currency used to purchase the tokens is stored in US T-bills, where the yield of those bills constitutes our profit. When the contract runs its course or is triggered the user transfers her tokens back to currency (USD).  The mechanics behind that are much more complicated due to the regulatory compliance needed, but this explanation captures the core idea.

How Deriveum creates jobs?

Facilitating private investment instrument as Deriveum impacts directly employment. Creating conditions for investment in high-impact projects attracts private capital, that otherwise would have stayed idle. Thus only through Deriveum the needed investment for job creation could be done. Hence our assertion that through Deriveum Europe the EU could see over 150’000 jobs created, which would not have been created otherwise.

Why Deriveum is a crypto-commodity?

CDS (debt insurance) are multi-annual contracts. Currencies settle immediately and are impractical as collateral for long-term insurance contracts as their titles are moved with first come, first served priority. Securities (following the Pittsburgh reform) can be separated from the underlying collateral, thus their security status in a default event is far from secured. Commodities on the other hand can be used as suitable collateral, but are price volatile and storage/movement cross-border is expensive. Deriveum improves on those shortcomings (provides price predictability and self-executability), making it tailor-made collateral for CDS contracts.

What is the difference between Deriveum and Deriveum Europe?

Deriveum is denominated in USD, thus the T-bills yield is 0.26%, which for $10 billion turnover provides revenues of $26 million. For reference the EUR denominated AAA T-bills bear yield of -0.65%. Therefore with Deriveum Europe we will be storing the value in no-interest bearing bank accounts. Wiping out our most significant revenue stream for the EU spin-off is challenge mainly for our marketing strategy, as the resources we would be able to dedicate for that become severely limited. Therefore we are looking for bright minds to discuss their ideas with us.

How Deriveum allows smaller financial institutions to join the market?

Deriveum changes the fractional reserve practice for CDS deals. Our users offer full coverage of the guaranteed amount, thus creating blockchain-backed certainty of repayment even if the Insurer itself defaults. Therefore from the perspective of the CDS holder the size of the Insurer is irrelevant, which provides competitive advantage to smaller financial institutions. The size and systemic importance will no longer be a decisive factor for CDS holders when they choose service providers.

You can see our initial position and expectation from coming to the hackathlon and contract it with our final product

Please check one One Pager explaining the what we intend to do and how


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